BP 2012 Annual Report Download - page 26

Our performance – continued Significant uncertainties exist in relation to the
amount of claims that are to be paid and will
become payable through the claims process.
There is significant uncertainty in relation to the
amounts that ultimately will be paid in relation to
current claims, and the number, type and
amounts payable for claims not yet reported. In
addition, there is further uncertainty in relation
to interpretations of the claims administrator
regarding the protocols under the settlement
agreement and judicial interpretation of these
protocols, and the outcomes of any further
litigation including in relation to potential opt-outs
from the settlement or otherwise. The PSC
settlement is uncapped except for economic loss
claims related to the Gulf seafood industry. There
can be no certainty as to how BP’s challenge to
the court’s ruling will ultimately be resolved or
determined. To the extent that there are
insufficient funds available in the Trust fund,
payments under the PSC settlement will be made
by BP directly and charged to the income
statement. See Plaintiffs’ Steering Committee
settlements on pages 60-61 for further
information as well as Risk factors on pages 41-42
and Financial statements – Note 36 on page 235.
See page 59 for information on the federal
multi-district litigation proceeding in New
Orleans (MDL 2179), the first phase of which
began on 25 February 2013.
US regulatory update
During the year, the US Department of Justice
(DoJ) continued to conduct an investigation into
the Deepwater Horizon incident regarding possible
violations of US civil and criminal laws. Similarly,
the US Securities and Exchange Commission
(SEC) continued their investigation regarding
possible violations of US securities laws.
BP reached an agreement with the US
government in November 2012 to resolve all
federal criminal claims arising out of the
incident. BP pleaded guilty to 11 felony counts
of misconduct or neglect of ships officers
A new chapter in the
North Sea
UK production in the North Sea has almost
halved in the past 10 years. But for BP the
story is far from over. Having produced some
5 billion barrels to date, we believe our assets
could yield considerably more. And there are
excellent prospects of finding new
opportunities too.
In response, we are working to get the most
from existing fields, building new production
and exploring for more. 2012 saw us make
good progress. We are on course with a
five-year, $19-billion programme of
investment in the UK North Sea, with our
partners. We achieved a planned start-up
safely and on time. And we sold a number of
non-strategic assets.
BP is currently one of the largest producers of
hydrocarbons in the UK. Our investments
mean we expect to be part of life in the
North Sea for decades to come.
400,000km2
New exploration acreage accessed since 2010.
US legal proceedings
For more information on our US settlements
for criminal and securities claims
see pages 162-171.
Financial review
For more on our performance in 2012
see pages 34-37.
relating to the loss of 11 lives; one
misdemeanour count under the Clean Water
Act; one misdemeanour count under the
Migratory Bird Treaty Act; and one felony count
of obstruction of Congress. BP will pay $4 billion
– including criminal fines and payments to the
National Fish & Wildlife Foundation and the
National Academy of Sciences – in instalments
over a period of five years. The court also
ordered, as previously agreed with the US
government, that BP serve a term of five years’
probation. BP has agreed to take additional
actions, enforceable by the court, to further
enhance the safety of drilling operations in the
Gulf of Mexico. These activities relate to BP’s
risk management processes, such as third-party
auditing and verification, training, and well
control equipment and processes such as
blowout preventers and cementing.
BP reached a settlement with the SEC in
November 2012, resolving the SEC’s Deepwater
Horizon-related civil claims. BP has agreed to a
civil penalty of $525 million and to an injunction
prohibiting it from violating certain US securities
laws and regulations. BP made its first payment
of $175 million in December 2012.
The US Environmental Protection Agency (EPA)
announced in November 2012 that it had
temporarily suspended BP p.l.c. and other BP
companies from participating in new federal
contracts. As a result of the temporary
suspension, the notified BP entities are
ineligible to receive any new US government
contracts or renewal of an expiring contract. The
suspension does not affect existing contracts
BP has with the US government, including
those relating to current and ongoing drilling and
production operations in the Gulf of Mexico. In
February 2013 the EPA issued a notice of
mandatory debarment for BP Exploration &
Production Inc at its Houston headquarters.
Mandatory debarment prevents that company
from entering into new contracts or new leases
Business review: Group overview
BP Annual Report and Form 20-F 2012
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